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You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

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Investor Protection? By Who?

About two months ago, a
man with bicycle named Elianto Wijoyono stood in the middle of an intersection
in City of Jogja to confront a Harley Davidson convoy, because the convoy was
deliberately going to break through a red light. This action of ‘Bicycle vs.
Harley’ gained a lot of comments on social media, and Elianto explained that he
had planned his action, because he was concerned with the bad behavior of those
motorists which often violate the traffic signals, causes trouble for other
road users in the city of Yogyakarta.

From many comments, one
comment came from a member of the Yogyakarta Police which say that Elianto has
just committed a vigilantism, which can be considered as a crime. Because, if
there was motorcycle riders who violate traffic light or something, then it is the
police who have the authority to give a warning or ticket, and not Elianto
because he was just a civilian.

Well, it’s a naive
statement, is not it? If it was the police who have the authority to give a
warning or ticket to Harley riders who break through the red light, then why
when these thugs repeatedly did it, the police did nothing? They even escorting
the convoys and help them to break through the red light! If the police do
their job well in regulating traffic and take action against all offenders
indiscriminately, including those Harley riders, do you think that Elianto
would wasting his time to stop the riders? It's no secret that the police in
Indonesia are still not carrying out their function of ‘Protect and Serve’ to
the whole society, because they only protect and serve the people who pay them
money.

But maybe, in
Indonesia, it is not only the police that haven’t yet working properly.

A few days ago, I was
called by a journalist who asks opinions regarding the statement of one of the
director of the Indonesia Stock Exchange (IDX), that ‘IDX expects the addition
of one hundred thousand of new investors every year’. So far there are about
400 thousand registered investors/stock traders in the stock market in
Indonesia, or only a little compared to the total population of the country of
about 270 million people. If the addition of one hundred thousand new investors
per year was realized, then in a few years the number of investors in the
Indonesian stock market will reach one million people or even more, and it will
bring the more turnover to the stock market itself.

The question, as a
market regulator, do you think that these one hundred thousand people are
willing to open an account to buy stock in the market? And what will be your
answer, if they asking about protection
from the potential crime of capital
markets?

Because, invest in
stock market is just like driving a car/motorcycle on the road. If you are
driving recklessly, then you might have an accident, and that’s your own fault.
But what if you are driving a car carefully and always obey traffic signs, but
nonetheless had an accident because of being hit by another driver who break through
a red light, and it is because the police allow such traffic violations???

Similarly, in the stock
market, an investor may suffer losses because he does not yet understand how to
analyze the company, lack of experience, or simply because the Jakarta
Composite Index (JCI) was dropped, and these are parts of the risk of losses that
is already in one ‘package’ with the potential of profits an investor might
earn.

But if investors suffer
losses because got fooled by a stock that kept rising until suddenly it fall
mercilessly as the case of Trada Maritime (TRAM), or a company whose
management is subject to a bankruptcy case such as Cipaganti
(CPGT), or a company that keep making losses until its equity became negative
such as Bumi Resources
(BUMI), or other cases where certain stocks move up or down extremely without
certain reasons.. then hey, FSA! What the hell are you doing? Why didn’t you
take action against whoever behind these companies/stocks???

While in fact, under
the law, the tasks of the Financial Service Authority (FSA) are: 1. To protect
the consumers, or in this case the investors, where it can be done by: 2.
Providing administrative sanctions against individuals/institutions who violate
the law of financial services. If the FSA are firm enough and always ready to
impose sanctions on companies, broker, or anyone who obviously has committed crime
or whatever that harm the public investors, then the companies would not dare
to break the law, and investors will automatically be protected.

Well, since the FSA was
formed in 2011, there were so many stocks that, intentional or not, moving
irrationally, causing huge losses to a large number of public investors. But what
did the FSA do to stop them? Almost nothing! At most, they only impose
sanctions in the form of a written warning, or fine of US$ 100 per day to the
company who delayed the releasie of its financial statements. Based on
information from www.hukumonline.com, between
2011 until August 2014, the FSA has dropped a total of 316 sanctions consisting
of 280 penalties to the companies who delayed the release of their financial
statements or other disclosure documents, 32 written warning, and the revoke of
license against two private financial service companies.

But what about the legal
cases that involving public companies, or the case of insider trading or
securities fraud that involving certain brokers, which obviously has been detrimental
to investors? Well well well, no problem!

And what about the IDX?
Sadly, it is exactly the same. Whenever a stock flying way up high or down low,
the IDX would only ask the management of the company: ‘What happen?’ But no further
action at all. If they impose sanctions, the sanctions is almost the same of
FSA: To suspend the trading of a stock, set the status of UMA (unusual market
activity), or impose a fine or written warnings to companies who delayed the
release of the financial statements, like if the crime in the capital market is
that one thing only: Delaying the release of the financial statements.

So when the director of
IDX say 'We want the addition of one hundred thousand investors per year', I
was amused.. How can you expect that the people will enter the stock market
while the market itself is full of white collar bandit who, almost freely,
committing their crime? That's like if you expect that the people would
willingly risk their safety by driving on chaotic streets where almost everyone
else violates traffic signs, because the police never do anything to stop them!

While, indeed, if based
on existing laws and regulations, there are no legal sanctions for a capital
market crime such as insider trading, securities fraud, or the like. So maybe it
is not FSA or IDX’s fault if the thieves are still wandering in the stock
market, because they are not authorized to take legal action (FSA can only
impose administrative sanctions, not criminal or even civil sanctions). But if
it is not the authority of these two, then the authority of whom? And if it's
not their authority, then what is meant by the word of ‘protection’ which obviously
is one of the functions and powers of the FSA???

This article may sounds
like criticism, and I, frankly, do not like to critic anyone. But I believe
that we all want that the stock market could be a friendly place for everyone,
and it can only be realized if all stakeholders, including the authorities and
the stock exchange regulators, carry out their roles, functions, and duties
respectively. If someone has committed a crime in the Indonesia Stock Exchange,
then as in the movie National Treasure, one must dare to say, 'Someone's got to
go to prison, Ben'. And, Mr. Tito Sulistio, I hope it’s you.